Now for one of the really tragic whispers emanating from an OVP partners meeting...

"Right team, wrong idea." 

We really agonize over this one. It doesn't happen all that often, but every once in a while we get this absolutely killer team in to present, with deep domain expertise in an exciting market.  And then, after they explain their business concept we say...

"Is that the best they can come up with?  What a shame!" (and then we shed a collective tear)

OK - for those regular readers of the G-B-U feature, as promised here is a "G" story.  Actually, it's two stories rolled into one.  Most of the time, the entrepreneurs we back act responsibly, ethically, and professionally.  So, it can be hard to decide where to draw the line, since there are too many "Good" stories to tell.

But, over the last six to nine months we've seen two CEOs do something very similar that strikes us as exceptionally "Good."  In both cases, she and he (one of each gender) came off a very successful quarter - yes, even in these turbulent times.  Both came to their respective Board meetings with the happy news that the company had grown nicely and had finally achieved that wonder of wonders - cash-flow breakeven!

So, what did they ask the Board for at that moment of happiness around the table?  More stock options?  Bigger bonuses? Perhaps a relaxation of the expense plan so they could hire more employees?

[ view Scott's site here ]

Our nation’s schools are in trouble. I’m sure that isn’t news to anyone who’s reading this. I’m a product of the public school system and, while the system wasn’t perfect back then, it served me and my family well.  In the decades since my graduation, however, things have steadily become much worse. The problems are now so deeply ingrained, the outcomes are now so appalling, and the costs so astronomical that we, as a society, can no longer afford to accept the status quo.  I’m fortunate to be able to send my three children to private schools, but I understand this isn’t an option for many families. The public education system in our country is failing us and we need to take action. This is precisely what motivated me to write my book, Outrageous Learning: An Education Manifesto, which was recently published by the Washington Policy Center.

One of the thorniest problems in taking investment dollars from corporate strategic investors is the risk of "selling the company without selling the company."  You want the money, you want the benefit of the power that corporate partner can bring, but you don't want to be arbitrarily capping your upside.  However, the corporate partner has a set of worries, too.  They don't want to give you money so you can make yourself so valuable they can't afford to buy you later, when you have grown into a significant enterprise.  So, how to you deal with these conflicting issues and goals?

Recently, we saw a negotiation settle around a tried-and-true model from the world of sports - baseball binding arbitration.  The model worked like this:  The strategic investor would put their money in for X% of the company.  In addition, they received an option to buy the entire startup at any time over the following three years, unless the company filed for an IPO.

Now for the tricky part:  How do you set the price today for a possible event up to three years from now without either capping your upside (if you are the entrepreneur) or paying for value you helped create (if you are the strategic investor)? 

Ever wonder where those strange or seemingly onerous terms in a venture financing come from?  Well, you are about to find out, as part of our on-going series "entrepreneurs behaving badly." (For those who missed G-B-U part 1, feel free to go back and review the rationale of this series for context - and know that there are "Good" stories yet to come).

As with most lessons in life, the ones we learn the hard way stick with us the best.  And you would think that after over 25 years in the venture business, we must have seen it all and learned it all.  Not so!  What follows is an example in recent times of what we consider a "U" on the G-B-U scale - and one that actually caused a change in the agreements we strike with entrepreneurs going forward.

As we think about healthcare reform in this country, it might be a good time to contemplate the question of who really deserves to get healthcare paid for by others. (I have already, in a previous post, proposed the idea that much of the system remain the same and that those who cannot afford health insurance be supplemented through something akin to “Healthcare Stamps.”)

What I mean by this is: How much personal responsibility and accountability should we demand?  For instance, if someone gets drunk and gets behind the wheel of a car, and gets into an accident in which he is injured, should the cost of that person’s medical treatments be borne by that individual or should tax dollars paid-in by others cover the costs?

Many observers, myself included, consider the 1990s the decade of the computer scientist. Work in digital bits and bytes not only generated significant wealth, it raised the standard of living for hundreds of millions of people around the world. However, as we close out the first decade of this century, I believe that materials and molecules have already supplanted bits and bytes as the powerful agents for the next round of prosperity and growth. This is the decade of the materials scientist.